Have Japan’s permanently zero interest rates resulted in severe distortions?

Japan’s interest rates have been at zero or near zero since 1999 and will probably remain so, given the country’s public debt. In the euro zone, it is also possible that the ECB will keep interest rates at zero for a long time should the economy weaken in 2019. It is therefore interesting to look at Japan to see whether any severe distortions have been caused by its interest rates remaining permanently at zero . They could take the form of: Asset-price bubbles; An excessive rise in debt; An abnormal depreciation of the exchange rate; Unnecessary, very low-yielding investments; The inability to use monetary policy countercyclically. Among these possible evils of permanently zero interest rates, we note in Japan: A fresh rise in real estate prices; Inefficient corporate investment; The inability to use monetary policy for countercyclical purposes.